Opinion

The American-US Airways merger promised improvement, but is it delivering?

By Christopher Elliott, special to The Washington Post

Posted:
03/26/2014 12:41:13 PM EDT

American Airlines flight 1770 from Atlanta, left, arrives at Philadelphia International Airport. A US Airways logo is on the tail of plane at right. (Alejandro A. Alvarez/AP Photo/The Philadelphia...)

The new American Airlines — the product of last year's controversial merger between American and US Airways — may only be a few months old, but that hasn't stopped travelers from forming opinions about the world's largest airline.

The carrier, based in Dallas, has made some noteworthy changes since it settled a lawsuit with the Justice Department in December, clearing the new American for takeoff. Among them: revising some of its frequent-flier benefits, small but important changes to the way it sells flights, and new ticket policies. “Significant benefits for customers are already being delivered,” says American spokesman John McDonald.

But passengers, virtually none of whom were asking for this merger, are skeptical. A survey conducted this month by a team of researchers from Georgetown University's McDonough School of Business found that customers expect prices to rise and quality of service to fall after an airline merger like this one. “Much to our surprise, most types of mergers are viewed negatively by consumers,” says Kurt Carlson, director of the Georgetown Institute for Consumer Research.

It's not difficult to find air travelers who are unhappy. Michael J. Fox, a retired high school teacher from Tucson, Ariz., says that American is treating its customers worse now than before the merger. Fox recently received a notification that his American Express Platinum Card would no longer give him access to the Admiral's Club lounge in Phoenix, nor any of the others in the American Airlines system. “This will affect many passengers in one big negative way,” he says.

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Some customers were also disappointed when American eliminated bereavement fares, a move the airline claimed was necessary to bring it in line with US Airways' policies. Bereavement fares are extended to passengers who have to attend a funeral and must fly at the last minute. Although American's pre-merger bereavement fares weren't known to be generous — offering only a 10 percent discount off the most expensive fare — they gave American brownie points in the customer-service category.

But not everyone is unhappy. Amanda Woodhead was pleasantly surprised when she checked in for a recent American flight and found that her US Airways benefits carried over, including a waiver of the fee for checked baggage. She has also seen more available flights when she visits the American website, which is the result of a so-called “code-sharing” arrangement. “It appears that the ticketing computer systems are aligning,” says Woodhead, a frequent flier who commutes from Washington to Nashville, where she works for a health-care company.

Experts say that it's too soon to know whether this merger will be relatively smooth, like the one between Delta and Northwest, or problematic, like the last legacy airline merger, between Continental and United. Many challenges lie ahead as the two companies start to operate as one, including such internal challenges as workforce integration and moving to a common reservations system.

“Customer complaints will likely be the first indicator of how things are going,” says Robert Mittelstaedt, dean emeritus of the W.P. Carey School of Business at Arizona State University, who is himself a frequent flier on American.

By that measure, the new American may have a little work to do. For January, the most recent month for which figures are available, it has a total of 305 formal grievances lodged with the Transportation Department, making it the second-most complained-about airline in America behind only United, which had 311 complaints. (Complaints filed to the DOT represent a fraction of actual complaints but can be a useful barometer of how an airline is doing on customer service.)

For 2013, the combined American was the most complained-about airline, with a total of 2,536 grievances. United, in second place, had 1,935 complaints.

Two other numbers worth considering are luggage fees and ticket-change fees, a constant source of irritation to passengers. In both those categories, American holds a commanding lead.

For the first nine months of 2013, the combined American collected more than $783 million in baggage fees, $148 million more than the No. 2 airline, Delta. Ditto for reservation change fees, where it charged passengers $650 million during the same period, or $14 million more than runner-up Delta.

Kendall Creighton, a spokeswoman for Flyersrights.org, called the numbers “alarming.” Although it figures that the world's largest airline would also collect the most fees and have the most complaints, she and other experts say that American can do better.

It's hard to find anyone who's entirely happy with the merged American — but not impossible. One person who's over the moon about the deal is Dennis Myrick, and he hasn't even flown on the carrier since it merged.

Two years ago, Myrick bought 32,000 shares of American Airlines stock at 60 cents per share. It was a risky investment, with American operating under bankruptcy protection. Initially, his shares faltered, but after the merger's approval, Myrick hit pay dirt. “My initial $20,000 investment is now worth north of $400,000,” he says.

Something tells me that American won't be able to make all its customers that happy. But with the busy summer travel season just ahead, let's hope that it tries.

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